The Acquisition Letter of Intent (LOI) is a crucial preliminary document in German M&A transactions, typically used after initial discussions but before detailed due diligence and definitive agreements. It serves to memorialize the parties' preliminary understanding and set the stage for more detailed negotiations. While predominantly non-binding, certain provisions like confidentiality and exclusivity are usually binding under German law. The document typically includes key transaction terms, proposed timeline, price range, and conditions precedent, reflecting both German legal requirements and international business practices. It's particularly important in cross-border transactions involving German entities, as it helps align expectations and provides a roadmap for the transaction while complying with German corporate and commercial law requirements.
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1. Date and Parties: Opening of letter identifying the parties, including full legal names, registration details, and addresses as required under German law
2. Transaction Overview: Brief description of the proposed transaction, including the target business/assets and transaction structure
3. Purchase Price and Payment Terms: Indicative purchase price, payment structure, and any price adjustment mechanisms
4. Due Diligence: Scope and process of the due diligence investigation, including access to information and timeline
5. Key Transaction Terms: Essential terms of the proposed transaction, including any major conditions or assumptions
6. Timeline: Proposed schedule for due diligence, negotiation, and closing of the transaction
7. Exclusivity: Terms of exclusive negotiation period, if applicable (typically a binding provision)
8. Confidentiality: Reference to existing or new confidentiality obligations (typically a binding provision)
9. Costs and Expenses: Allocation of costs and expenses during the negotiation phase
10. Non-Binding Nature: Clear statement about which provisions are non-binding and which are binding
11. Governing Law: Specification of German law as governing law and jurisdiction for disputes
1. Break Fee: Include when parties want to specify compensation if either party terminates negotiations under specific circumstances
2. Management Retention: Include when there are specific plans or requirements regarding key management personnel
3. Regulatory Approvals: Include when the transaction requires specific regulatory approvals or notifications
4. Labor Considerations: Include when there are significant employment-related matters to be addressed
5. Financing Conditions: Include when the acquisition is subject to securing specific financing arrangements
6. Asset Perimeter: Include when there's a need to specifically define which assets/subsidiaries are included or excluded from the transaction
1. Key Assets Schedule: List of main assets or business units included in the proposed transaction
2. Timeline Schedule: Detailed timeline with key milestones and deadlines
3. Due Diligence Checklist: Preliminary list of required documents and information for due diligence
4. Price Calculation Framework: Basic framework for purchase price calculation and adjustments
5. Key Employees List: List of key employees or positions critical to the transaction, if relevant
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Acquisition Letter Of Intent
A preliminary document under German law outlining proposed terms and conditions for a potential acquisition, establishing the framework for negotiations and due diligence.
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